LG agrees to pay Microsoft royalties for every Android device it sells

The Microsoft Tax is in the news again. Following in the footsteps of HTC, Acer, and Samsung, LG has just signed a patent licensing agreement with Microsoft. Translation? LG will pay Microsoft a ‘tax’ for each and every Android device (be it phone or tablet) it will sell from now on. The reason being Microsoft’s extensive patents, of course.

Basically Microsoft is taking a different approach than Apple. While the latter is busy suing Android makers around the world, trying to get their products banned from sale, Microsoft is open to licensing the use of its patents. That, ironically, means that the more Android devices some companies sell (those who entered into agreements with Microsoft), the more money Microsoft makes.

Yes, it’s a twisted world, but that’s just the way it is. As for any details, they were, as they always are, secret. So we don’t know exactly how big that Microsoft Tax is. We can however estimate that it won’t have any visible effect on the pricing of high-end and midrange LG Android devices. However, when speaking about low-end offerings, the situation gets more complicated, for this patent fee may turn out to be a significant percentage of such a device’s cost. That could, in time, mean that similarly-specced Android smartphones won’t be sold as cheap as competing products.

However, again ironically, Microsoft isn’t taking advantage of this yet, for its Windows Phone mobile operating system only runs on upper-midrange handsets as of now. Perhaps in a few months we’ll see more affordable Windows Phones, running the rumored Tango release of the OS.

In the press release that announces Microsoft’s agreement with LG, the Redmond-based company boasts that over 70% of Android smartphones sold in the US are “receiving coverage under Microsoft’s patent portfolio”. Translation: over 70% of Android smartphones sold in the US are generating revenue for Microsoft. That’s an interesting situation to be in.

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